3.20 Purpose: An easy to use manual that sets out the obligations of each party and the processes which need to be followed. Since the contract is a legal document, the contract administration manual should explain the key contractual provisions and processes in plain English. The manual should set out who does what, when, how and where. This will enable accountability to be checked against the risk register.
Useful documents: The principal document is evidently the contract itself. In addition, SOPC 4 deals with events that may occur during the construction and operational phases of a project5. Operational Taskforce Note 1 sets out information and procedures for undertaking both benchmarking and market testing exercises6.
Areas to consider: Partnerships UK's research into operational projects found that 78% of the contact managers surveyed agreed that the payment mechanism supported the effective contract management of the project7. The contract manager should know exactly what needs to be done when and how, and what happens if there is any failure to meet contractual requirements. The contract manager needs to identify both the risks and obligations of all parties. The contract administration manual may well be the most appropriate place to document the ways in which such obligations fit with the governance arrangements. At a minimum, the manual would be expected to provide information in the following areas:
Processes:
• how to monitor compliance with contract conditions;
• procedures to follow when faced with key contractual issues such as market testing or benchmarking, variations, poor Contractor performance, and disputes;
• how to monitor and manage financial issues, such as indexation; and
• contingency plans in case things go wrong.
Performance monitoring:
• the payment mechanism, its overview and principles and how to make deductions;
• performance monitoring, points systems and recording the obligations of the Contractor;
• the helpdesk, how it works, key contact details and procedures;
• establishment of milestones and key deliverables.
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5 Standardisation of PFI Contracts 4, HM Treasury, March 2007.
6 Operational Taskforce Note 1: Benchmarking and Market Testing Guidance, HM Treasury, October 2006.
7 Report on Operational PFI Projects, Partnerships UK, March 2006.